Budget Electoral Funding Cap: Clean and cashless India, not yet!

Sarika Malhotra
February 1, 2017

With as much talk about 'need to cleanse the system of political funding in India', the government was found wanting in its commitment. By capping the maximum amount of cash donation to a political party to Rs 2,000 in the Budget 2017, the government just paid lip service to one the biggest loopholes in electoral funding - cash donations. Interestingly, political parties themselves have become a convenient parking place for black money.

The earlier limit cash limit was Rs 20,000 and former Chief Election Commissioner, V S Sampath acknowledged that a lot of black money becomes white, as donations less than Rs 20,000 can be taken in cash and its donor details are not to be declared by the political parties. Take the instance of Bahujan Samaj Party, its accounts filing to the Election Commission read, 'Voluntary contributions below Rs 20,000: Rs 71,38,00,000 during the year ending 31.3.2011'. Nearly 75 per cent funding of the national parties is raised from cash/sale of coupons/undeclared sources through such multiple small donations.

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The Finance Minister also announced that the political parties can take donations through digital payments and cheques, however, there is nothing new about it, since the donations above Rs 20,000 anyway were mandated to be made through cheques.

With the new cash cap of Rs 2000 in the Budget 2017, the government has just ensured that the number of such fictitious donors would go up, but not the window to manipulate cash donations.

Despite all its effort to move towards a digital, cash less economy, the government conveniently ignored the historic opportunity to go cash less, which would have been possible with a mere amendment in the existing IT ACT and the numbers it enjoys in the house!